Questions and Answers
What is structural change?
Changes in the sectoral structure of the economy, specifically in the relative contributions of agriculture, industry, and services to GDP and employment.
Structural change is expected to shift from an agrarian-based economy to a mature services-oriented economy.
True
What does the structuralist perspective argue about economic development?
The neoclassical view supports the idea of sustained structural imbalance.
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What is meant by beneficial/growth-enhancing structural change?
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Structural change aims to shift resources to more dynamic/increasing returns activities, specifically to sectors with scope for cumulative productivity increases, known as ______.
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What two key questions are posed for developing countries regarding structural change?
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According to the structuralist approach, does the shift to higher productivity sectors happen automatically?
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Study Notes
Structural change, industrialisation, and development
- Structural change refers to shifts in the economy's sectoral structure, impacting GDP and employment distribution among agriculture, industry, and services.
- Economic development typically progresses from agrarian economies to industrialization, culminating in service-oriented economies.
- Structural change is vital due to varying productivity rates across sectors, influencing overall economic growth.
- The structuralist perspective originated from early development economics, notably the ECLAC school, advocates like Raul Prebisch, Hans Singer, Albert Hirschmann, and Nicholas Kaldor emphasized the importance of structural changes.
Neoclassical vs. Structuralist Viewpoints
- Neoclassical economics posits that disequilibria are temporary, optimal factor distribution occurs, and growth convergence is standard.
- Structuralists argue that sustained structural imbalances may persist and optimal distribution for growth is often lacking.
- They contend that merely addressing growth fundamentals (like institutions and property rights) is insufficient for sustained growth, justifying active industrial policies.
Growth-enhancing Structural Change
- Beneficial structural change involves reallocating labor and capital from low to high productivity sectors.
- Key characteristics include shifting to more dynamic sectors with potential for cumulative productivity increases, creating a virtuous cycle of growth.
- For developing countries, crucial questions are identifying which sectors to target and determining the means of facilitating these shifts.
Role of the Manufacturing Sector
- Structuralists advocate for a significant role of the manufacturing sector in driving structural change and economic development.
- The transition to higher productivity sectors is not automatic; various factors influence this process, such as ownership patterns, technological state, costs, and political and institutional contexts.
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Description
This quiz covers key concepts from Section IA of the ECO412 course notes, focusing on structural change, industrialization, and economic development. Students will explore the relationships between these elements and their significance in contemporary economics. Prepare to reflect on the importance of these themes in the context of industrial growth.
